Correlation Between Navios Maritime and Diana Shipping

Can any of the company-specific risk be diversified away by investing in both Navios Maritime and Diana Shipping at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Navios Maritime and Diana Shipping into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Navios Maritime Partners and Diana Shipping, you can compare the effects of market volatilities on Navios Maritime and Diana Shipping and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Navios Maritime with a short position of Diana Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of Navios Maritime and Diana Shipping.

Diversification Opportunities for Navios Maritime and Diana Shipping

0.71

Correlation Coefficient

Navios Maritime  Diana Shipping

Poor diversification

The 3 months correlation between Navios and Diana is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Navios Maritime Partners and Diana Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diana Shipping and Navios Maritime is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Navios Maritime Partners are associated (or correlated) with Diana Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diana Shipping has no effect on the direction of Navios Maritime i.e., Navios Maritime and Diana Shipping go up and down completely randomly.

Pair Corralation between Navios Maritime and Diana Shipping

Considering the 90-day investment horizon Navios Maritime Partners is expected to generate 0.93 times more return on investment than Diana Shipping. However, Navios Maritime Partners is 1.07 times less risky than Diana Shipping. It trades about -0.06 of its potential returns per unit of risk. Diana Shipping is currently generating about -0.2 per unit of risk. If you would invest  5,356  in Navios Maritime Partners on August 30, 2024 and sell it today you would lose (565.00) from holding Navios Maritime Partners or give up 10.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Navios Maritime Partners  vs.  Diana Shipping

Navios Maritime Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Navios Maritime Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Diana Shipping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diana Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Navios Maritime and Diana Shipping

The main advantage of trading using opposite Navios Maritime and Diana Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Navios Maritime position performs unexpectedly, Diana Shipping can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Diana Shipping will offset losses from the drop in Diana Shipping's long position.

The idea behind Navios Maritime Partners and Diana Shipping pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.